My employer changed the way he is paying my LLC

[Alt2022]

Hello,

I have created a new LLC during the year of 2023. I work as a consultant. My employer was paying my LLC through a software called Gusto showing his own LLC company.

Now he decided to stop using Gusto and started paying my LLC directly from his personal bank account.

Is that a problem for me when I file my taxation on April 2024?

[VolvoGirl]

No, however someone pay you doesn't matter.  Are you a Single Member LLC and file schedule C in your personal tax return?  Does he give you a 1099NEC for it?  The total he paid you should be on the 1099NEC or maybe two 1099s.  But you need to  keep track of your own income.

Actually you can just enter it as Other self employment income or as Cash or General income. You don't need to get a 1099NEC or 1099K. Even if you did you can enter all your income as Cash. Only the total goes to schedule C. You should be entering the income from your own records.

By the way if he is paying you as an Independent Contractor with a 1099NEC he is not your employer but your client or customer.  

[Alt2022]

yes , I am a single owner LLC and file joint personal tax return with my spouse. So which forms the employer should give me by the end of the year ?

[VolvoGirl]

If  he paid you $600 or more  he might give you a 1099NEC.  But since you are a LLC he might not have to give you any form at all.  

You will need to keep good records. You may get a 1099NEC or 1099K at the end of the year if someone pays you more than $600 but you need to report all your income no matter how small. You might want to use Quicken or QuickBooks to keep track of your income and expenses.

Are you new to self employment?  Is this the first  year you will be reporting it?

[Alt2022]

yes, thats the first year to use Turbotax as I just created the LLC. the income is higher than 600 usd as the payment is covering periods from April till Dec 2023

[VolvoGirl]

Did you set up your SMLLC as an S corp?  That  is special.  If not your LLC is a disregarded entity and you file it in your personal tax return on Schedule  C.  Here is some general info.

When you are self employed you are in business for yourself and the person or company that pays you is your customer or client.

To report your self employment income you will fill out schedule C in your personal 1040 tax return and pay SE self employment Tax. You will need to use the Online Premium or Self Employed version or any Desktop program but the Desktop Home & Business version will have the most help.

Turbo Tax Beginners Tax Guide for the Self Employed
https://turbotax.intuit.com/tax-tips/self-employment-taxes/beginners-tax-guide-for-the-self-employed...

What is form 1099NEC?
https://turbotax.intuit.com/tax-tips/irs-tax-forms/what-is-form-1099-nec/L5fbwIFSn

Here is some IRS reading material……
IRS information on Self Employment
https://www.irs.gov/businesses/small-businesses-self-employed/self-employed-individuals-tax-center

Publication 334, Tax Guide for Small Business
https://www.irs.gov/pub/irs-pdf/p334.pdf

Publication 535 Business Expenses
https://www.irs.gov/pub/irs-pdf/p535.pdf

You pay Self Employment tax on $400 or more of net profit from self-employment in addition to any regular income tax. You pay 15.3% SE tax on 92.35% of your Net Profit greater than $400. The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare. So you get social security credit for it when you retire.

You may need to send in quarterly estimated payments. You must make quarterly estimated tax payments for the current tax year if both of the following apply:
- 1. You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits.

- 2. You expect your withholding and credits to be less than the smaller of:
90% of the tax to be shown on your current year’s tax return, or
100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months.)

Here are the blank Estimates and instructions…..
https://www.irs.gov/pub/irs-pdf/f1040es.pdf

Or you can pay on the IRS website. Be sure to pick 2023 1040ES payment
https://www.irs.gov/payments

[xmasbaby0]

If you are a consultant, you are not an employee.  You are an independent contractor.   You will be preparing a return using either online Self-Employed software or any version of the CD/download.   You will be paying self-employment tax for Social Security and Medicare as well as ordinary income tax.   The business you are consulting for should issue a 1099NEC to you if they paid you more than $600 in 2023.

https://ttlc.intuit.com/questions/2926899-how-does-my-side-job-affect-my-taxes

https://ttlc.intuit.com/turbotax-support/en-us/help-article/form-1099-nec/1099-nec/L5qTsBiSe_US_en_U...

https://ttlc.intuit.com/community/self-employed/help/how-do-i-report-income-from-self-employment/00/...

https://ttlc.intuit.com/community/self-employed/help/what-is-the-self-employment-tax/00/25922

https://ttlc.intuit.com/questions/2902389-why-am-i-paying-self-employment-tax

https://ttlc.intuit.com/questions/1901340-where-do-i-enter-schedule-c

https://ttlc.intuit.com/questions/3398950-what-self-employed-expenses-can-i-deduct

https://ttlc.intuit.com/questions/1901110-do-i-need-to-make-estimated-tax-payments-to-the-irs

https://turbotax.intuit.com/tax-tools/calculators/self-employed/